US files antitrust lawsuit against AMR & LCC

Discussion in 'American Airlines | AAdvantage' started by ukinny, Aug 13, 2013.  |  Print Topic

  1. ukinny

    ukinny Silver Member

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    fyi (source: Bloomberg)
     
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  2. Juanefny

    Juanefny Silver Member

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    Just got an alert from politico that says that some states are also taking action against the merger.
     
  3. rwoman
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    rwoman Gold Member

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  4. iolaire
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    iolaire Gold Member

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    http://www.bloomberg.com/news/2013-08-13/amr-us-airways-deal-blocked-by-u-s-in-antitrust-suit.html

    American Airlines’ merger with US Airways Group Inc. should be blocked, the U.S. Justice Department said in a lawsuit filed in Washington, upending American’s plans to exit bankruptcy through a deal that would create the world’s biggest airline.

    The department, in a lawsuit filed in federal court in Washington, said the proposed tie-up violates U.S. antitrust law and would lead to less competition in the industry and higher prices for consumers. US Airways fell as much as 11 percent.

    The Justice Department sued to block the transaction because it would remove the incentive for US Airways to offer lower prices and lead to higher airfares for consumers, said a person familiar with the matter who asked not to be identified because the matter is private.

    The suit, unexpected by analysts and industry executives, marks a sharp break with the department’s past policy, which allowed six unprofitable airlines to merge over the past five years in an effort to cut costs and end losses. For American parent AMR Corp., which filed for bankruptcy protection in November 2011, the merger would have completed its reorganization and allowed it to exit court protection.
    (more)
     
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  5. Gtitan
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    Gtitan Gold Member

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    Have to imagine a good part of the focal point (de facto and not de jure) is the slots at DCA.
     
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  6. delff128

    delff128 Silver Member

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    Basically the DOJ is complaining there will be 4 major airlines controlling 80% of domestic traffic and US Airways and American were just the last to the merger party hence the anti-trust suit.

    Sent from my iPhone using milepoint
     
  7. brodyf

    brodyf Gold Member

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    So if the merger is blocked, would US still be allowed to join OneWorld? Interesting.
     
  8. Canadi>n
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    Canadi>n Gold Member

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    The Justice Department should stop wasting its time on activities like this and spend its time pursing "justice" by going after states that are passing restrictive voting laws and attacking women's rights to their reproductive freedom of choice!
     
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  9. DestinationDavid
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    They (DOJ and the states who joined) will ask for concessions and it'll likely still go through. I'm not too confident US and AA will drop this and go back to their previously scheduled activities.
     
  10. Photonerd71

    Photonerd71 Silver Member

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    And posters should try and stay on topic. Plenty of other message boards for social commentary. This is a travel/freq flyer site.
     
  11. John777

    John777 Silver Member

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    Hear, hear
     
  12. skyvan

    skyvan Gold Member

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    "US Files antitrust lawsuit against US"
     
  13. DestinationDavid
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    Yes, political commentary belongs in the off-topic forum. Let's keep this AA (or at a minimum travel) related. Please and thank you!
     
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  14. basiface

    basiface Silver Member

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    Too late for that! Granted I never liked the merger, but they might as well let the last two majors merge. Especially since their markets don't overlap much anywho.
     
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  15. JoeCortez

    JoeCortez Silver Member

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    This is going to be an interesting question to get answered. I think this is now more a matter of "When" than "If." Originally, US was scheduled to join oneworld by Q3 2013, right? Now I have to suspect that this will possibly be delayed...
     
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  16. avflyer
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    avflyer Silver Member

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    I agree with you on one side, that they should be going after the voter ID laws, but this issue is also very important. If you live in Hawaii, Arizona, Texas and a few other key markets, this merger will definitely mean higher fares and less competition.
     
  17. avflyer
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    avflyer Silver Member

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    Quoting the Bloomberg article:

    “We’re in court today because we think a full-stop injunction is the right outcome for consumers,” said Assistant U.S. Attorney General Bill Baer, head of the Justice Department’s antitrust division, at a press conference today in Washington. He said the government had talks with the airlines before filing the lawsuit, adding that the proposed merger was “pretty messed up.”

    Doesn't sound like the DOJ has much flexibility.
     
  18. DestinationDavid
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    Yes, because the government would never overstate its desired outcome when going into a situation like this in order to disguise their actual goal. ;)
     
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  19. LETTERBOY
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    LETTERBOY Gold Member

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    A good part, yes, but probably not the only part. I can't imagine DOJ would've filed a lawsuit if DCA slots were their only objection.

    I hope DOJ is successful in blocking this, but it wouldn't shock me if it went through eventually.
     
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  20. rwoman
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    rwoman Gold Member

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  21. avflyer
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    Agreed. Hopes are high, expectations are low.
     
  22. zphelj

    zphelj Gold Member

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    More uncertainty = higher chance of DEQM promo's ;) (don't hold your breath, just sayin .. )
     
  23. Aktchi
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    Aktchi Silver Member

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    For better or worse, US DOJ does have considerable clout in such matters. OTOH, overstating one's position is a common tactic and they may well be satisfied with a few more concessions from AA and US. Interesting times ahead.
     
  24. ChrisUNC

    ChrisUNC Silver Member

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    I think the number of markets impacted by this merger is grossly underestimated. For many flyers living in non-hub, non-focus markets where a connection is required to fly most places, competition will be significantly reduced and fares will go up.

    Anyone out there (FFers) in support of this merger? It seems like there is very little support from the flying public. I'm curious to know the POV in support of this merger (from a FFer's perspective).
     
  25. MSPeconomist
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    MSPeconomist Gold Member

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    This seems to be the argument being made in a study by a passenger consumer group that advocates the lawsuit.

    I agree that the focus on nonstop service between city pairs isn't a good metric, but sometimes a merger of two smaller competitors can more effectively compete with existing large firms.
     

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